Insurance Appeal Depends on Meaning of ‘Medically Necessary’

Health
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By Martine G. Brousse

Learn more about Martine on NerdWallet’s Ask an Advisor

In the realm of insurance denials, few are more frustrating than those issued for “lack of medical necessity.” If your doctor prescribed a treatment or procedure, it must be medically necessary, right?

It depends. “Medically necessary” has different meanings. Understanding which one applies to your case determines your appeal options.

1. Standard Medical Practice

The most common definition of “medically necessary” is “the service/procedure/treatment is reasonably expected to prevent the onset of a condition, reduce or ameliorate the effects of an illness or condition, or help an individual obtain or maintain maximum functional capacity.”

From the insurance point of view, the most economical, least invasive, most efficient way of achieving that result is the preferred option.

Let’s say your prescription is brand name, but over-the-counter or generic alternatives are available. In most cases, the medical necessity for the more expensive drug would not be justified.

When a surgical or invasive intervention is recommended, medical necessity means no other pharmaceutical, more conservative or non-invasive therapies are indicated.

2. Your insurance policy

Visiting your insurance website can be enlightening. Coverage of the same procedure or drug may vary from insurer to insurer. It is advisable to always confirm that a service or prescription is covered under your policy to avoid costly surprises.

Restrictions are often found on procedures that have cheaper or less radical alternatives, or those deemed “elective.” If the insurer can argue that the life or welfare of the patient is not in immediate danger, or that the condition can be managed via a more conservative approach, the medical necessity for more drastic measures is often rejected.

Take knee replacement, for example: Your physician may recommend immediate replacement surgery, but your insurer may require physical therapy and pharmaceutical pain management until the condition becomes more serious or continues for a certain length of time without improvement.

 3. The Food and Drug Administration

If a drug or treatment is not approved by the Food and Drug Administration for use, or is not indicated for your specific diagnosis (a use known as “off label”), it is not medically necessary — unless accepted exceptions apply.

The most important criterion for a drug is the listing in the NCCN Drugs and Biologics Compendium, the “bible of medications.” If an off-label use is published there, your insurance may agree to cover it. Even though the off-label use is not FDA-approved, its listing in the compendium indicates that it has become an accepted use within the medical community.

4. The Physician

Based on professional experience, your treating physician might prescribe a stronger prescription than the over-the-counter version, bypassing the standard protocol. He might also disregard a longer-term approach for a quicker but more drastic solution based on medical and other criteria.

5. Your Preferences

As a billing manager, I have seen my share of cases where convenience and personal preferences were the basis for requesting a specific prescription or treatment.

A young mother choosing to undergo a gentler but longer type of chemotherapy when the norm is a less costly, shorter but debilitating treatment can be justified, but requests based on marketing ads, advice from friends and family members or indiscriminate Internet research will not.

Medical providers might be tempted to prescribe a certain drug, or order a test or scan, to please (and keep) their patient. Relying on unverified statements by the patient, they may be led to advise serious interventions when they are not truly indicated.

Unsupported by sound, appropriate medical records, it will be difficult to prove medical necessity in such cases.

Depending on the point of view, medical necessity takes many forms. It usually follows established protocols. When your insurance issues a denial, it does so based on specific reasons, including published policies, FDA guidelines or standard medical practices. Other valid explanations include a lack of medical records, insufficient justification or a missing authorization.

Until the insurer receives evidence supporting the need for an unusual service in your specific case, expecting a change of decision might be a lost cause.